Connect with us

Featured

Benefits of the New Fintech Law for Cryptocurrency Users in Chile

One key point is the increased security within the crypto ecosystem itself. When the new fintech law comes into force, the platforms will have the obligation to alert the Financial Analysis Unit (UAF) about suspicious operations of fraud, scams, money laundering, and financing for illicit activities, as well as the agency, will be able to issue instructions to the same companies to combat them.

Published

on

Quite a lot of water has flowed under the bridge in the crypto world in Chile, since in 2018 the legal mess between the platforms for buying and selling digital assets and banks began, until today, with a market approaching half a million users.

A few days ago, another milestone was added, perhaps one of the most important: the Fintech Law was approved by the Chamber of Deputies by a large majority in its last procedure, making it ready to be enacted by President Boric, a document that also establishes the legality and regulation of both crypto platforms, as well as crypto assets. The question is: does it change anything for users?

Read more about the new fintech law adopted in Chile and find the latest financial news in the world with our companion app Born2Invest.

Financial backing

“In general, both for users and companies, the future enactment of the law is great news. First, those who have cryptocurrencies will be safer when it comes to going to a platform, while on the side of startups and exchanges, there will be greater certainty and clear regulatory frameworks to operate,” says Joel Vainstein, co-founder and Chief Growth Officer of Orionx.

First of all, platforms must be approved and regulated by the Financial Market Commission (CMF). This step obliges the platforms to provide guarantees on four important aspects: 1. to be responsible with the information they offer to individuals, 2. to demonstrate operational capacity to support the transactions carried out on it, 3. to have internal protocols for responding to users, and 4. to have corporate governance for risk management.

“While there are not many, there have been very bullish cases of crypto platforms that in the face of crises have blocked user transactions or frozen money. This is a real concern. However, when the new law comes into force, any company recognized by the CMF will have to demonstrate a financial back that will allow it, in case of any crisis, to be able to respond with the restitution of the investment to its clients. This is a tremendous guarantee,” emphasized the Orionx executive

SEE ALSO  3 qualities leaders need to overcome tough times

Prosecution of crimes

Another key point is the increased security within the crypto ecosystem itself. When the law comes into force, the platforms will have the obligation to alert the Financial Analysis Unit (UAF) about suspicious operations of fraud, scams, money laundering, and financing for illicit activities, as well as the agency, will be able to issue instructions to the same companies to combat them.

“Currently there are services of companies that perform data analysis in blockchain, such as Chainalysis, to detect and stop illicit or suspicious activities, allowing to stop transactions, and thus prevent money from reaching known illicit entities or users from falling into scams. They are a kind of ‘blacklist’ and automated systems for detecting irregular movements, very useful, which we already have and will have to be a standard in the near future,” said Vainstein.

New products

Finally, regarding new products, the Orionx executive said that “this new clear legal framework to operate will favor the emergence of new use cases and services for people, since at least in legal terms, it matches crypto platforms with banks and other financial institutions.”

That is, new products such as mutual funds, loans, credit cards, stocks, or blockchain-based securities will be more likely to appear, as the spirit of the law protects fintech companies more against banks against past measures such as account closure. Instead, there will be greater confidence to establish alliances between fintech companies themselves and card brands, increasing competition and favoring user-facing product offerings.

__

(Featured image by sergeitokmakov via Pixabay)

DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.

This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.

First published in DIARIOESTRATEGIA, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.

Valerie Harrison is a mom of two who likes reporting about the world of finance. She learned about the value of investing at a young age upon taking over her family's textile business when she was just a teenager. Valerie's passion for writing can be traced back to working with an editorial team at her corporate job, where she spent significant time working on market analysis and stock market predictions. Her portfolio includes real estate funds, government bonds, and equities in emerging markets such as cannabis, artificial intelligence, and cryptocurrencies.

Continue Reading